Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting to read:%0A%0A {0} %0A%0A {1}

Office Marketbeat Report

Manami Chisaki • 28/04/2023

ECONOMY: Tokyo’s Employment Recovery Continues
Despite growth in advanced economies now expected to decelerate to 1.3% in 2023 and 1.4% in 2024, Japan's real GDP growth rate is forecast to remain steady at 1.1% in 2023 and 1.2% in 2024. Total employment in Tokyo has now grown by 450,000 since Q4 2019, while nationwide total employment has fallen by 300,000 over the same three-year period. By industry, the technology sector has gained 101,000 jobs, while manufacturing has lost 50,000 positions, both from the baseline figures of Q4 2019.


SUPPLY & DEMAND: Incoming Supply to Lift Vacancy Ahead
The Tokyo Central 5 Wards Grade A office vacancy rate remained near flat in Q1 2023 at 3.7%, up 3 bps y-o-y, with availability remaining at 6.9%. Annual net absorption was also positive at 2.7 million sf, although overall leasing demand remained tepid,tracking around 60% of the 10-year historical average recorded before COVID-19.

Over the next 12 months, new supply is expected to triple from the 2022 figure, at around 1.5 times higher than the 10-year historical average. With demand weaker, as demonstrated by commitment of just 54.8% at incoming supply and 24.7% for new buildings, we can expect supply to exceed demand, lifting vacancy in secondary buildings over the next two years.


PRICING: Growing Rental Bifurcation Continues Across Major Submarkets
SubmarketsThe Tokyo C5W Grade A average assumed achievable rent (”rent”) continued to trend down in Q1 2023, down 1.1% y-o-y to record ¥34,327. With the rental fall outpacing the drop in asking rents, down 0.6% y-o-y, overall market conditions remain in favor of tenants.

By submarket, weaker activity in non-core districts, combined with the volume of new supply, lifted vacancy higher in the quarter.In the Mita/Tamachi area, entry of a new Grade A property with some launch availability lifted the submarket’s overall vacancy to 31.4%, while also driving the area’s rent up 5.9% y-o-y to ¥29,214. Conversely, in Shibuya and Nishi-Shinjuku, new entrants withlaunch availability pushed vacancy up just modestly to 2.9% and 1.2%, respectively.

Growing rent level bifurcation among building grades continues as tenants seek a flight to quality. The Grade A office sectorhas now recorded a drop of 3.9% for asking rent and 4.8% for assumed achievable rent since Q4 2019. This compares to a greater fall for Grade B properties, posting a decline of 6.2% for asking rent and 8.1% for assumed achievable rent in the same period.



With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Privacy & Cookies.
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All